Trade School Funding Mess

In recent weeks private trade schools have been tirelessly lobbying Congress for a share of the $1.1 billion that Washington gives states each year to fund vocational education for low-income adults at community colleges and secondary schools. The funding is largely intended to help move hundreds of thousands of Americans from welfare to work.

The trade schools, which teach everything from cosmetology to computer programming, make an argument that’s sensible in principle: Why bar us from vocational education funds when we’re often more nimble in responding to the needs of the job market than public vocational programs? The trade schools are unencumbered by the government bureaucracies and academic protocols that can hobble community colleges and secondary schools.

In practice, however, there’s a solid reason why now is not the time to divert vocational education funding to private trade schools--lack of oversight. It’s virtually nonexistent in many states and lax even in relatively well-regulated states like California.

The agency regulating California’s trade schools was dismantled last year, and in January its functions were moved to the Department of Consumer Affairs, where there is a growing backlog of student complaints amid a staff shortage. Before the agency was established in 1989, California was derided by the American Council on Education as a world center of fraudulent trade schools: “diploma mills” or “phantom schools” that would either solicit federal student aid money for imaginary students or take taxpayers’ and students’ money and then fold before holding any classes.

Washington funnels hundreds of millions of dollars indirectly to trade schools through student aid programs like Pell grants. But rising fraud in the Pell grant program underscores the lack of national accountability measures and hardly argues for looser restrictions.

Last year, the Internal Revenue Service found that more than $100 million in grants intended for low-income students had instead gone to students whose incomes disqualified them for grants. Some schools eager to collect Pell tuition money helped orchestrate false financial disclosure applications. Since 1980, more than 90% of indictments for federal financial aid fraud have involved trade schools.

The IRS needs to develop an ongoing process for matching student aid applications against taxpayer data. The federal government should also work with states to ensure that taxpayer dollars are spent on training people for jobs that are truly in demand.

The United States has a dire shortage of workers with some high-demand technical skills. This year, for instance, 346,000 jobs in the information technology sector will go unfilled due to a lack of properly trained workers. Meanwhile, millions of tax dollars are going to train workers for jobs they will never have. A federal report last year showed that California trade schools graduated 46 appliance and equipment repair technicians for every available job in the field. Similarly, an Education Department study estimated that Washington and students themselves spent over $1 billion in fiscal year 1990 on cosmetology training, a year in which the national supply of cosmetologists exceeded the jobs by more than a million.

Most trade schools are legitimate institutions whose owners follow the rules and provide practical educational benefits. But until the federal government ensures that accountability measures are firmly in place against fraud and waste, the government’s vocational education dollars should not be allowed to flow loosely.